Cutting British taxes on company profits would cost £3.5 billion ($5.3 billion) each year, but it can be paid for by scrapping some business tax reliefs, the opposition Conservatives said on Sunday. The revenue neutral move, which would take full effect by April 2011 at the latest if the Conservatives win an election due by June, must fit into the party's pledge to cut a record budget deficit faster than current Labour government plans. “It is paid for by changes in the system ... by removing complex reliefs and allowances,” the party's economic spokesman George Osborne, likely to be Britain's finance minister in any Conservative government, told BBC television. “For example, there is an investment allowance for small business which I think is complicating the system.” The centre-right Conservatives, a traditionally business-friendly party, say they will announce a fully-funded cut in corporation tax to 25 percent from 28 percent in their first budget due within 50 days of potentially taking office. Osborne said that cut would cost about £2.5 billion each year while reducing small companies' tax to 20 percent from 21 percent, would cost about one billion pounds. The measures are part of a wider Conservative strategy to make Britain a more attractive place to do business and to stimulate growth after an 18-month recession which reduced economic output by 6.2 percent. The Labour party and some business groups have warned that scrapping investment incentives in order to cut taxes on profits could hinder some firms, especially in manufacturing, that want to expand. The Conservatives, once seen as the safe bet to end 13 years of Labour rule this year, have seen a large opinion poll lead almost evaporate in recent weeks. A poll for the Sunday Times newspaper on Sunday suggested that Labour, under Prime Minister Gordon Brown, could even retain enough seats in parliament to form a minority government. Markets most fear a hung parliament in which no one party has control because of concerns about the repercussions that might have for plans to cut a budget deficit set to top 12 percent of gross domestic product this year. Labour says it will halve the deficit over four years but the Conservatives say more needs to be done and sooner to protect Britain's top
